Your Guide to Accessing Canadian Small Business Grants
by Bruce Tannas
While there is no such thing as ‘free money,’ receiving a business grant is the next best thing. All they take is your time and preparation in accessing them. So, as you consider your financing mix for starting, buying, or expanding your business you need to consider the available Canadian small business grants from all levels of governments and a few private foundations. In this article we’ll explore some of these grants and how to access them.
To start with, it is important to do a little research about which grants are out there and which might apply to your business. There are a few good search tools to find business grants in Canada including from Government of Canada, the Ontario government, and the BC Government. Other provincial governments will have their grants listed on their respective websites. In addition, there are organizations that help entrepreneurs that have links to various grants as well. And don’t forget to check out your municipal website as some municipalities offer business grants as well.
Most of the available grants relate to the priorities of the government or organization that is extending the grant. There are business grants that relate to employment and training, innovation, agri-food, tourism, environment, exporting, business grants for women, Indigenous peoples, as well as other priorities that the specific government has. Keeping in mind that government priorities will be important as you write your grant proposal as this is how applications for a specific grant will be assessed.
David Kincade of Alberta Business Grants advises that you “you speak to the grant agency before you write a grant application.” David recommends that you ask them six questions including checking if “you’re eligible for the grant, whether there are still funds available for the year, when is the deadline and are they accepting applications, how competitive is the program, and if the grant officer can offer any advice on applying for a specific grant.”
Hiring and Training Staff:
There may be grants for hiring new people from the Government of Canada or a specific province with such grants typically being for students or disadvantaged groups. Also, the Government of Canada has made agreements with the provinces to provide grants for training programs. For example, Alberta companies could be eligible for a training grant where the government contributes two-thirds of the cost to a maximum of $10,000 per trainee per fiscal year or up to $15,000 for a new hire that was previously unemployed (learn more about the Canada/Alberta training grant at https://www.alberta.ca/canada-alberta-job-grant.aspx). Similar grants would be available in other provinces as well as this training grant is a partnership between federal and provincial governments.
Grants for Women and Indigenous Entrepreneurs:
At the time of writing, there were no specific business grants for women directly from the Government of Canada, but Start UP Canada offers a Women Founders grant for female entrepreneurs with STEM orientated businesses. Women entrepreneurs should also check with their provincial government to see if there are any female entrepreneur specific grants available.
Indigenous entrepreneurs should check for grants at all levels of government plus at their First Nation. In addition, there are the Crown-Indigenous Relations and Northern Affairs Canada grants and loans through one of the Aboriginal financial institutions in Canada.
Innovation business grants:
Both the Canadian and various provincial governments offer innovation grants to businesses. These innovation grants are not necessarily for technology companies only but instead are targeted for businesses that are conducting research and development (R&D) to create innovative products, services or processes.
Eileen Ashmore MBA, from Strategic Timelines Inc., who assists technology driven businesses, says that “innovation grants are mostly for a first of kind innovation versus an improvement that makes a process or product operate more efficiently.”
The federal government offers grants through the National Research Council’s Industrial Research Assistance Program (IRAP). IRAP supports innovation with technology uncertainty and typically funds the R&D portion of the salaries of employees and the fees of contractors who are working on the R&D project. Some direct R&D costs may also be covered.
Different provinces offer different innovations grants but there may be complimentary aspects to federal government and provincial innovation programs. For example: Alberta Innovates provides ten different programs for SME’s. The Alberta Innovates program offers some complimentary elements to the IRAP program because it pays for contractors (not employees). The Alberta program and the IRAP program are therefore able to fund different parts of the R&D process. So it is important to check out what your province funds and compare it to what the federal government funds as combining grants (where permitted) can greatly lower your R&D costs.
Entrepreneurs applying for innovation grants need to remember to include government priorities as they fill out their grant applications. Eileen Ashmore points out that grant applications may not be successful if they are not written to “position the application in terms of government priorities such as job creation, economic growth, partner impact, supplier impacts, and community impacts.” According to Eileen “it is important to completely answer each question in the grant application.” She reminds us that government grants follow a competitive process and those applications that align best with the purpose of the grant and the priorities of the funder will be more successful in securing grant funding.
SR&ED Grants (often said as “Shred”):
The scientific research and experimental development tax incentive (abbreviated as SR&ED or SRED) program is administered by the Canada Revenue Agency (CRA) and is designed to encourage Canadian companies to conduct R&D. Eligible R&D costs can be given a tax deduction, investment tax credit, and/or refund of between 15% to 60% of the cost of the R&D expenditures. These deductions can be claimed on previous expenses for 3 years and carried forward for up to 20 years (once the application is filed with the CRA).
Like many other tax programs there are specific rules for what expenditures can qualify. According to Jack Goodman at Canada SRED Grants “some people don’t apply because they think their R&D activity won’t qualify” or they “see the lengthy application and shy away from the program.” But Jack says that the “program can be worth the extra work as it helps to lower the overall costs of R&D for companies.” The SR&ED program covers costs for salaries, contracts with Canadian contractors, and materials for R&D that bought in Canada. Jack advises his clients to prepare for filing for SR&ED by “holding onto their T4’s for employees involved with R&D, invoices related to R&D materials and contracts, as well as having your accountant prepare their financial statements.”
While there are government grants for small business they generally fall upon priority areas of the government that is providing the grant. In addition, there are some private organizations that offer business grants though readers should be cautioned that there are also scams out there as well. So take the time to research which grant(s) may be applicable to your business, to speak to the granting organization, and to prepare a well-developed application and you could be on your way to receiving a business grant.
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